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Mzansi short term voluntary insurance -- Hollard Insurance

About the Project

 
Project Name: Mzansi short term voluntary insurance -- Hollard Insurance
Type of Facility Project: Microinsurance innovation grantee
Country of Operation: South Africa
Region: Africa
Sub Topics: Client interface, Claims, Sales, Composite products, Property, Life, Transaction processing
Type of Risk Carrier: Regulated insurance company
Type of Distribution Channel: Bank
 

Organizational Overview

Hollard Insurance, a family-owned group, is the South Africa´s largest private insurance company. Active for twenty-seven years, it has 1,300 brokers providing both short-term and life insurance services to more than 6 million policyholders in South Africa and abroad.

The Hollard Insurance Group (Hollard) established in 1980, is the largest independent, privately owned insurance group in South Africa and provides both life and short-term (non-life) insurance. Hollard has a long history of working in the low-income market and views the market as a core element of its strategy in South Africa and internationally. 

Key to Hollard’s sustained growth has been its partnership philosophy, which permeates all of Hollard’s day-to-day activities. The philosophy is focused on recognizing like-minded partners, understanding respective strengths and driving long-term value through optimized structures to ensure mutual success. 

 

Project Description

In 2008 Hollard sought funding from the Microinsurance Innovation Facility. The agreed project had two strands. The first and major strand was to explore how to deliver voluntary short-term insurance (e.g. household structure and contents) to the low-income market in South Africa and the region. The South African microinsurance market is one of the more developed in Africa. However, the majority of microinsurance on offer is limited to funeral insurance. Though still in a nascent stage, prope...READ MORE
 

Beneficiaries

Expected target groups: low-income households in urban and rural areas not currently using short term insurance such as household insurance 
Expected outreach: 1 million clients within 10 years

 

Learning Agenda

  • How does household and other short term insurance fit within a range of other risk-management needs and strategies by low-income households? What is the client value proposition?
  • What type of household and other short term insurance products are demanded? What is optimal coverage versus price?
  • What are cost-effective distribution channels, sales and customer loyalty strategies as well as claims administration in the microinsurance value chain?
  • What is role of technology within the value chain?
  • How can a private insurer get involved in education that serves both its own and consumers´ interests?
  • What are key differences between Small and medium-sized enterprises (SME) asset insurance and household insurance regarding all the aspects above?

Project Status

Key Performance Indicators
 

March  2012

March 2013

March 2014

Average monthly sales

1054

848

1121

Total sales for the year

12656

10184

13454

Active policies

10300

13313

13695

Sales-to-leads ratio

4%

10%

19%

Number of claims

163

42

289

Value of claims

R 328 734

R 226 276

R 1 927 359

 
 
Project Updates
Key achievements: Successfully launched a property insurance product to the low-income segment, which does not usually have access to property insurance in South Africa Sales volumes steadily averaging 1,000 sales a month Experimented with original marketing campaigns Implemented and evaluated a consumer education campaign JET product Distribution Hollard developed a property product, covering both building and contents. To deliver this new kind of insurance to clients als...READ MORE

Project Lessons

On demand for property insurance Perceived risk does not correspond to actual risk, and this has implications for product design. Consumers often overestimate frequent risks (and underestimate infrequent risks) because they are more familiar with the impact frequent risks have on loss of assets or income. Homeowners in South Africa may be more familiar with loss of assets to theft than to fire, even though fire has the potential to be more costly. ...READ MORE
 
 
On distribution through retail channels Distribution is much more likely to be successful where sales of the insurance product are aligned with the distribution channel’s core business or aims. Partners’ motivation will have a direct bearing on the amount of upfront and on-going involvement and support offered by the partner. As expected, a partner with insurance experience is more likely to commit to a higher level of involvement and longer-term engagem...READ MORE
 
 
On developing appropriate consumer education A full evaluation of Hollard’s consumer education workshops can be found here. Education and marketing campaigns must be targeted and focused on potential clients. Hollard wanted to reach property owners and individuals with sufficient disposable income through their education campaigns, as they were the likely clients of the product. However, most of the workshop attendees were not homeowners and their ...READ MORE
 
 
Date of last update:  July 2014